Like a full-course meal, restaurant news keeps coming. Let's dig into a few of the industry events that made headlines this week.
1. Leave Carl's Jr. alone
Shares of Carl's Jr. and Hardee's parent CKE Restaurants (NYSE: CKR) took a 6% hit yesterday, after a Wedbush Morgan Securities analyst downgraded the stock on margin erosion concerns.
CKE had posted healthy comps trends earlier in the week -- up 3.6% for its latest quarter -- but rising food costs are leaving analysts worried. Most of the leading burger chains have been able to boost their unit level sales in this tricky climate, but the real challenge now is to see if they can pass on the commodity spikes to their hungry patrons.
2. Checkmate, BK
Fast food royalty Burger King (NYSE: BKC) posted healthy fourth-quarter results yesterday. Worldwide revenue climbed 9% higher, with adjusted earnings per share soaring 28% to $0.37. That certainly doesn't sound like burger chain margin erosion, does it? No, but the CEO did warn that food costs should tick higher during the new fiscal year, sending shares lower on the otherwise upbeat news.
Analysts were only expecting a profit of $0.34 a share out of the company. The Whopper topper has beaten Wall Street's earnings estimates for eight consecutive quarters.
Comps were also crown-worthy, with a 5.3% gain globally during the period. Worldwide comps for Burger King have now risen in each of the past 18 quarters.
3. Hold the green peppers and the lettuce
Rising food costs and customers with empty pockets find casual dining chains in a bind. BJ's Restaurants (Nasdaq: BJRI) is no different. The haven of deep-dish pizzas and cool brews on tap introduced a new weekday lunch specials menu, with several items starting at just $5.95. That's an unusually low price point for a chain like BJ's, but just as casual dining bellwethers like TGI Fridays have started to offer discounted smaller portions to appeal to the thrifty, now isn't a time for the industry to get greedy.
4. Hasta la pasta
Brinker International (NYSE: EAT) has been trying to sell its Macaroni Grill chain since last summer. It finally found a buyer for its casual pasta-tossing concept. Private equity firm Golden Gate Capital will fork over $131.5 million for a majority stake in Macaroni Grill, leaving Brinker with a 19.9% chunk.
Brinker will record a cash tax benefit on the sale, though one has to wonder if it's unloading the right concept. Macaroni Grill may have been a dog in the company's portfolio a year ago, but it has actually been one of the company's better performers lately.
5. Don't take anything for granite
Eateries love to issue press releases when they open new locations, but you rarely come across a release detailing a single closing. Granite City Food & Brewery (Nasdaq: GCFB) did, though.
Could it be that Granite is so small, with 25 locations, that every closing counts? It's more than that. The restaurant being closed opened just 10 months ago, but was a drain on the company. The unit generated a net loss of $1.3 million, with the company faulting a pivotal road closure eating into the area's traffic. In short, Granite City is making the closing public so investors see this as an isolated incident.
6. Bowling for bagels
Noah's Bagels, part of the Einstein Noah Restaurant Group (Nasdaq: BAGL) family, celebrated its 19th anniversary by offering its signature 12-ounce coffee for just $0.19 a cup.
Don't worry, Starbucks (Nasdaq: SBUX). The $0.19 promo was just for Tuesday. However, too many of these promo deals can enlighten coffee sippers on the growing number of places to get premium brews.
Check out this week's dessert specials:
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